[Federal Register Volume 76, Number 178 (Wednesday, September 14, 2011)]
[Notices]
[Pages 56797-56807]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-23548]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Cumulus Media Inc., et al.; Proposed Final
Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment and
Competitive Impact Statement have been filed with the United States
District Court for the District of Columbia in United States of America
v. Cumulus Media Inc., et al., Civil Action No. 1:11-cv-01619. On
September 8, 2011, the United States filed a Complaint alleging that
Cumulus Media Inc.'s proposed acquisition of Citadel Broadcasting
Corporation would violate Section 7 of the Clayton Act, 15 U.S.C. 18.
The proposed Final Judgment, filed the same time as the Complaint,
requires Cumulus to divest certain broadcast radio stations in
Harrisburg-Lebanon-Carlisle, Pennsylvania and Flint, Michigan, along
with certain tangible and intangible assets.
[[Page 56798]]
Copies of the Complaint, proposed Final Judgment, and Competitive
Impact Statement are available for inspection at the Department of
Justice, Antitrust Division, Antitrust Documents Group, 450 Fifth
Street, NW., Suite 1010, Washington, DC 20530 (telephone: 202-514-
2481), on the Department of Justice's Web site at http://www.usdoj.gov/atr, and at the Office of the Clerk of the United States District Court
for the District of Columbia. Copies of these materials may be obtained
from the Antitrust Division upon request and payment of the copying fee
set by Department of Justice regulations.
Public comment is invited within 60 days of the date of this
notice. Such comments, and responses thereto, will be filed with the
Court and may be published in the Federal Register. Comments should be
directed to John Read, Chief, Litigation III Section, Antitrust
Division, Department of Justice, Washington, DC 20530,; (telephone:
202-307-0468).
Patricia A. Brink,
Director of Civil Enforcement.
United States District Court for the District of Columbia
United States of America, United States Department of Justice,
Antitrust Division, Litigation III Section, 450 Fifth Street, NW., 4th
Floor, Washington, DC 20530, Plaintiff, v.
Cumulus Media Inc., 3280 Peachtree Road, NW., Atlanta, Georgia 30305,
and
Citadel Broadcasting Corporation, 7690 West Cheyenne Avenue, Suite 220,
Las Vegas, Nevada 89129, Defendants.
Case: 1:11-cv-01619, Assigned To: Sullivan, Emmet G., Assign. Date: 9/
8/2011, Description: Antitrust.
Complaint
The United States of America, acting under the direction of the
Attorney General of the United States, brings this civil action to
enjoin the proposed acquisition of Citadel Broadcasting Corporation
(``Citadel'') by Cumulus Media Inc. (``Cumulus''), and to obtain other
equitable relief. The acquisition would likely substantially lessen
competition for the sale of radio advertising in certain geographic
markets in the United States, in violation of Section 7 of the Clayton
Act, 15 U.S.C. 18. The United States alleges as follows:
I. Nature of the Action
1. By agreement dated March 10, 2011, Cumulus agreed to acquire
Citadel (by acquiring all of the shares of Citadel) in a cash-and-stock
deal that values Citadel at about $2.5 billion.
2. Cumulus and Citadel are two of the largest operators of
broadcast radio stations in the United States. Cumulus' proposed
acquisition of Citadel would make Cumulus the third largest operator of
broadcast radio stations in the United States. Cumulus' and Citadel's
radio stations provide substantial head-to-head competition against one
another for the business of local and national companies that seek to
advertise on radio stations in Harrisburg-Lebanon-Carlisle,
Pennsylvania; and Flint, Michigan.
3. As alleged in greater detail below, the proposed acquisition
would eliminate this substantial head-to-head competition and would
result in many advertisers paying higher prices for radio advertising
time. Therefore, the proposed acquisition violates Section 7 of the
Clayton Act. 15 U.S.C. 18.
II. Jurisdiction and Venue
4. The United States brings this action pursuant to Section 15 of
the Clayton Act, as amended, 15 U.S.C. 25, to prevent and restrain
Defendants from violating Section 7 of the Clayton Act, 15 U.S.C. 18.
5. Cumulus and Citadel sell radio advertising, a commercial
activity that substantially affects, and is in the flow of, interstate
commerce. The Court has subject-matter jurisdiction over this action
pursuant to Section 15 of the Clayton Act, 15 U.S.C. 25, and 28 U.S.C.
1331, 1337(a), and 1345.
6. Citadel transacts business and is found in the District of
Columbia. Cumulus has consented to venue in this District. Therefore,
venue is proper in this District for Cumulus and Citadel under Section
12 of the Clayton Act, 15 U.S.C. 22. Citadel and Cumulus have consented
to personal jurisdiction in this District.
III. The Defendants
7. Cumulus, organized under the laws of Delaware, with headquarters
in Atlanta, Georgia, is one of the four largest radio broadcast
companies in the United States in terms of revenue. In 2010, Cumulus
reported radio broadcast revenues of approximately $259 million.
8. Citadel, organized under the laws of Delaware, with headquarters
in Las Vegas, Nevada, is one of the three largest radio broadcast
companies in the United States in terms of revenue. For the period June
1, 2010 through December 31, 2010, Citadel reported net revenues of
approximately $444 million.
IV. Relevant Markets
9. The relevant markets for Section 7 of the Clayton Act are the
sale of radio advertising time to advertisers targeting listeners in
two separate Arbitron Metro Survey Areas (``MSAs) by radio stations in
those MSAs. The two MSAs are: Harrisburg-Lebanon-Carlisle,
Pennsylvania, which includes Cumberland, Dauphin, Lebanon and Perry
Counties in Pennsylvania (the ``Harrisburg MSA''); and Flint, Michigan,
which includes Genesee County in Michigan (the ``Flint MSA'').
10. Advertisers buy radio advertising time on Cumulus and Citadel
radio stations within geographic areas defined by an MSA. An MSA is the
geographical unit that is widely accepted by radio stations,
advertisers and advertising agencies as the standard geographic area to
use in evaluating radio audience size and composition. Cumulus and
Citadel radio stations in the Harrisburg and Flint MSAs generate almost
all of their revenues by selling advertising time to local, regional,
and national advertisers who want to reach listeners in each of those
MSAs. Typically, a radio station's advertising rates are based on the
station's ability, relative to competing radio stations, to attract
listening audiences that have certain demographic characteristics that
advertisers want to reach.
11. Many local and national advertisers purchase radio advertising
time because they find such advertising preferable to advertising on
other media platforms. Reasons for this include the fact that radio
advertising time may be more cost-efficient and effective than other
media at reaching the advertiser's target audience (individuals most
likely to purchase the advertiser's products or services). In addition,
radio stations offer certain services or promotional opportunities to
advertisers that advertisers cannot obtain as effectively using other
media.
12. Local and national advertising that is placed on radio stations
broadcasting into the Harrisburg or the Flint MSA is aimed at reaching
listening audiences that are present in those MSAs. Radio stations that
primarily broadcast into other MSAs do not provide effective access to
those audiences.
13. If there were a small but significant and non-transitory
increase in the price that Harrisburg and Flint radio stations sold
radio advertising time to advertisers targeting listeners in the
Harrisburg and Flint MSAs, advertisers would not switch enough
purchases to other radio stations or forms of advertising to render the
price increase unprofitable. Although some
[[Page 56799]]
local and national advertisers may switch some of their advertising to
other radio stations or media rather than absorb a price increase in
radio advertising time in the Harrisburg or Flint MSAs, the existence
of such alternatives would not prevent the Harrisburg or Flint radio
stations from profitably raising their prices a small but significant
amount. At a minimum, Harrisburg or Flint radio stations could
profitably raise prices to those advertisers that view radio targeting
listeners in Harrisburg or Flint as a necessary advertising medium, or
as a necessary advertising complement to other media. Radio stations
negotiate prices individually with advertisers; consequently, radio
stations can charge different advertisers different prices. Radio
stations generally can identify advertisers with strong preferences to
advertise on radio in their MSAs. Because of this ability to price
discriminate among customers, radio stations may charge higher prices
to advertisers that view radio in their MSA as particularly effective
for their needs, while maintaining lower prices for other advertisers.
V. Likely Anticompetitive Effects
14. Radio station ownership in the Harrisburg and Flint MSAs is
highly concentrated. Cumulus' and Citadel's combined advertising
revenue shares exceed 40 percent in both the Harrisburg and Flint MSAs.
15. As articulated in the Horizontal Merger Guidelines issued by
the Department of Justice and the Federal Trade Commission, the
Herfindahl-Hirschman Index (``HHI'') is a measure of market
concentration.\1\ Market concentration is often one useful indicator of
the likely competitive effects of a merger. The more concentrated a
market, and the more a transaction would increase concentration in a
market, the more likely it is that a transaction would result in a
meaningful reduction in competition harming consumers. Mergers
resulting in highly concentrated markets (with an HHI in excess of
2,500) that involve an increase in the HHI of more than 200 points are
presumed to be likely to enhance market power under the merger
guidelines.
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\1\ See U.S. Dep't of Justice, Horizontal Merger Guidelines
Sec. 5.3 (2010), available at http://www.justice.gov/atr/public/guidelines/hmg-2010.html. The HHI is calculated by squaring the
market share of each firm competing in the market and then summing
the resulting numbers. For example, for a market consisting of four
firms with shares of 30, 30, 20, and 20 percent, the HHI is 2,600
(30\2\ + 30\2\ + 20\2\ + 20\2\ = 2,600). It approaches zero when a
market is occupied by a large number of firms of relatively equal
size and reaches a maximum of 10,000 points when a market is
controlled by a single firm. The HHI increases both as the number of
firms in the market decreases and as the disparity in size between
those firms increases.
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16. Concentration in both the Harrisburg and Flint MSAs would
increase significantly as a result of the proposed acquisition. The
post-acquisition HHI in the Harrisburg MSA would be approximately
3,900. The post-acquisition HHI in the Flint MSA would be over 4,000.
Both of these HHIs are well above the 2,500 threshold at which the
Department normally considers a market to be highly concentrated.
Cumulus' proposed acquisition of Citadel would result in a substantial
increase in the HHI in both markets in excess of the 200 points
presumed to be anticompetitive under the merger guidelines
17. Advertisers that use radio to reach their target audiences
select radio stations on which to advertise based upon a number of
factors including, among others, the size and composition of a
station's audience. Many advertisers seek to reach a large percentage
of their target audiences by selecting those stations whose listening
audience is highly correlated to their target audience. If a number of
stations broadcasting in the same MSA efficiently reach a target
audience, advertisers benefit from the competition among those stations
to offer better prices and services.
18. Cumulus and Citadel compete for listeners in the Harrisburg and
Flint MSAs. Cumulus and Citadel each have stations in those two MSAs
that seek to appeal to and attract the same listening audiences. For
many local and national advertisers buying radio advertising time in
the Harrisburg and Flint MSAs, the Cumulus and Citadel stations are
close substitutes for each other based upon their specific audience
characteristics.
19. During individual price negotiations between advertisers and
radio stations, advertisers often provide the stations with information
about their advertising needs, including their target audience and the
desired frequency and timing of ads. Radio stations have the ability to
charge advertisers differing rates based in part on the number and
attractiveness of competitive radio stations that can meet a particular
advertiser's specific target needs.
20. During these negotiations, advertisers that desire to reach a
certain target audience can gain more competitive rates by ``playing
off'' Cumulus stations against Citadel stations in the Harrisburg and
Flint MSAs. The proposed acquisition would end this competition.
21. Post-acquisition, if Cumulus raised prices or lowered services
to those advertisers that buy advertising time on the Cumulus and
Citadel stations in the Harrisburg or Flint MSAs, non-Cumulus radio
stations in the Harrisburg or Flint MSAs would not be induced to change
their formats to attract those audiences in sufficiently larger numbers
to defeat a price increase. Successful radio stations are not likely to
change a format solely in response to a small but significant price
increase to advertisers by a multi-station firm such as Cumulus because
they likely would lose their existing audiences. Even if less
successful stations broadcasting in the Harrisburg and Flint MSAs did
change format, they would still be unlikely to attract in a timely
manner enough listeners to provide suitable alternatives to the post-
acquisition Cumulus.
22. The entry of new radio stations into the Harrisburg and Flint
MSAs would not be timely, likely or sufficient to deter the exercise of
market power.
23. The effect of the proposed acquisition of Citadel by Cumulus
would be to lessen competition substantially in interstate trade and
commerce in violation of Section 7 of the Clayton Act.
VI. Violation Alleged
24. The United States hereby repeats and realleges the allegations
of paragraphs 1 through 25 as if fully set forth herein.
25. Cumulus' proposed acquisition of Citadel would likely
substantially lessen competition in interstate trade and commerce, in
violation of Section 7 of the Clayton Act, 15 U.S.C. 18, and would
likely have the following effects, among others:
(a) Competition in the sale of advertising time on radio stations
in the Harrisburg and Flint MSAs would be substantially lessened;
(b) Actual and potential competition in the Harrisburg and Flint
MSAs between Cumulus and Citadel in the sale of radio advertising time
would be eliminated; and
(c) The prices for advertising time on radio stations in the
Harrisburg and Flint MSAs would likely increase, and the quality of
services would likely decline.
VII. Request for Relief
The United States requests:
(a) That the Court adjudge the proposed acquisition to violate
Section 7 of the Clayton Act, 15 U.S.C. 18;
(b) That the Court permanently enjoin and restrain the Defendants
from carrying out the proposed acquisition or
[[Page 56800]]
from entering into or carrying out any other agreement, understanding,
or plan by which Citadel would be acquired by, acquire, or merge with
Cumulus;
(c) That the Court award the United States the costs of this
action; and
(d) That the Court award such other relief to the United States as
the Court may deem just and proper.
Dated: September 8, 2011.
Respectfully submitted,
For Plaintiff United States.
Sharis A. Pozen (DC Bar 446732),
Acting Assistant Attorney General for Antitrust.
Patricia A. Brink,
Director of Civil Enforcement.
John R. Read (DC Bar 419373),
Chief.
David C. Kully (DC Bar 448763),
Assistant Chief, Litigation III Section.
Mark Merva (DC Bar 451743),
Attorney, Litigation III Section, Antitrust Division, U.S.
Department of Justice 450 Fifth Street, NW., 4th Floor, Washington,
DC 20530. Telephone: (202) 616-1398. Facsimile: (202) 514-7308. E-
mail: [email protected].
United States of America, Plaintiff v.
Cumulus Media Inc., and Citadel Broadcasting Corporation; Defendants.
Case: 1:11-cv-01619.
Assigned To: Sullivan, Emmet G.
Assign. Date: 9/8/2011.
Description: Antitrust.
Competitive Impact Statement
The United States, pursuant to Section 2(b) of the Antitrust
Procedures and Penalties Act (``APPA'' or ``Tunney Act''), 15 U.S.C.
16(b)-(h), files this Competitive Impact Statement relating to the
proposed Final Judgment submitted for entry in this civil antitrust
proceeding.
I. Nature and Purpose of the Proceeding
The United States filed a civil antitrust Complaint on September --
, 2011, seeking to enjoin Cumulus Media Inc.'s (``Cumulus'') proposed
acquisition of Citadel Broadcasting Corporation (``Citadel''), alleging
that the acquisition would substantially lessen competition for radio
advertising in Flint, Michigan and Harrisburg-Lebanon-Carlisle,
Pennsylvania in violation of Section 7 of the Clayton Act, 15 U.S.C.
18. At the same time the Complaint was filed, the United States also
filed a Preservation of Assets Stipulation and Order and a proposed
Final Judgment, which, as described below, are designed to eliminate
the anticompetitive effects of the proposed acquisition.
Under the terms of the proposed Final Judgment, Cumulus must divest
three broadcast radio stations--WRSR (FM) licensed to Owosso, Michigan
and owned by Cumulus (``WRSR''); WCAT-FM licensed to Carlisle,
Pennsylvania and owned by Citadel (``WCAT''); and the assets used in
the operation of WWKL (FM) licensed to Palmyra, Pennsylvania and owned
by Cumulus (``WWKL'') (other than the station intellectual property),
and the station intellectual property used in the operation of WTPA
(FM) licensed to Mechanicsburg, Pennsylvania and owned by Cumulus
(``WTPA''), including all programming contracts and rights
(collectively the ``Radio Assets''). The Preservation of Assets
Stipulation and Order requires that Cumulus and Citadel take steps to
ensure that the Radio Assets will remain independent of and
uninfluenced by Cumulus and Citadel prior to the Court's approval of
the proposed Final Judgment. To ensure that competition is preserved
during this time period, the Stipulation requires that the Court
appoint a management trustee to serve as manager of the Radio Assets.
The duties and responsibilities of the management trustee are set forth
in the Stipulation. The management trustee will have the power to
operate the Radio Assets in the ordinary course of business, so that
they will remain independent and uninfluenced by defendants and so that
the Radio Assets are preserved and operated as an ongoing and
economically viable competitor to defendants and to other broadcast
radio companies.
At the time the Court approves the proposed Final Judgment,
pursuant to Section IV of that proposed Final Judgment, the Court will
appoint a divestiture trustee who will be responsible for divesting the
Radio Assets. The United States contemplates that the Court will
appoint the management trustee as the divestiture trustee upon the
Court's approval of the proposed Final Judgment. Unless the United
States grants an extension, it is contemplated that the divestiture
trustee will divest the Radio Assets to a buyer or buyers that the
Department, in its sole discretion, has approved within four (4) months
of the date of entry of the proposed Final Judgment. After the Radio
Assets are transferred to the divestiture trustee, the divestiture
trustee will continue to operate the stations independently of Cumulus
and Citadel as viable ongoing businesses.
The United States and defendants have stipulated that the proposed
Final Judgment may be entered after compliance with APPA. Entry of the
proposed Final Judgment would terminate this action, except that the
Court would retain jurisdiction to construe, modify, or enforce the
provisions of the proposed Final Judgment, and to punish violations
thereof.
II. The Alleged Violation
A. The Defendants
Cumulus, organized under the laws of Delaware, with headquarters in
Atlanta, Georgia, is one of the four largest radio broadcast companies
in the United States in terms of revenue. In 2010, Cumulus reported
radio broadcast revenues of approximately $259 million.
Citadel, organized under the laws of Delaware, with headquarters in
Las Vegas, Nevada, is one of the three largest radio broadcast
companies in the United States in terms of revenue. For the period June
1, 2010 through December 31, 2010, Citadel reported net revenues of
approximately $444 million.
B. Description of the Events Giving Rise to the Alleged Violation
On March 10, 2011, Cumulus agreed to acquire Citadel (by acquiring
all of the shares of Citadel) in a cash-and-stock deal that values
Citadel at about $2.5 billion. The proposed acquisition would make
Cumulus the third largest operator of broadcast radio stations in the
United States. Cumulus' and Citadel's radio stations compete head-to-
head against one another for the business of local and national
companies that seek to purchase radio advertising time that targets
listeners that are present in the Flint and Harrisburg MSAs. The
proposed acquisition would eliminate that competition.
C. Anticompetitive Consequences of the Proposed Acquisition
1. Radio Advertising
The Complaint alleges that the provision of radio advertising time
to advertisers targeting listeners in two separate MSAs (the Flint MSA
and the Harrisburg MSA) by radio stations in those MSAs are two
relevant markets for purposes of Section 7 of the Clayton Act.
Advertisers buy radio advertising time on Cumulus and Citadel radio
stations within geographic areas defined by an MSA. An MSA is the
geographical unit that is widely accepted by radio stations,
advertisers and advertising agencies as the standard geographic area to
use in evaluating radio audience size and composition.
Cumulus and Citadel radio stations in the Harrisburg and Flint MSAs
generate almost all of their revenues by selling advertising time to
local and national advertisers who want to reach listeners present in
each of those MSAs.
[[Page 56801]]
Typically, a radio station's advertising rates are based on the
station's ability, relative to competing radio stations, to attract
listening audiences that have certain demographic characteristics that
advertisers want to reach.
Many local and national advertisers purchase radio advertising time
because they find such advertising preferable to advertising in other
media for their specific needs. For such advertisers, radio time (a)
May be less expensive and more cost-efficient than other media in
reaching the advertiser's target audience (individuals most likely to
purchase the advertiser's products or services); or (b) may offer
promotional opportunities to advertisers that they cannot exploit as
effectively using other media. For these and other reasons, many local
and national advertisers who purchase radio advertising time view radio
either as a necessary advertising medium for them or as a necessary
advertising complement to other media.
Local and national advertising placed on Flint and Harrisburg radio
stations is aimed at reaching listening audiences in the Flint and
Harrisburg MSAs. Radio stations that primarily broadcast into other
MSAs do not provide effective access to audiences in the Flint and
Harrisburg MSAs. If there were a small but significant increase in the
price that Flint and Harrisburg radio stations sold radio advertising
time to advertisers targeting listeners in the Flint and Harrisburg
MSAs, advertisers would not switch enough purchases to other radio
stations or forms of advertising to render the price increase
unprofitable.
Although some local and national advertisers may switch some of
their advertising to other radio stations or media rather than absorb a
price increase for radio advertising time in the Harrisburg or Flint
MSAs, the existence of such alternatives would not prevent the
Harrisburg or Flint radio stations from profitably raising their prices
a small but significant amount. At a minimum, Harrisburg or Flint radio
stations could profitably raise prices to those advertisers that view
radio targeting listeners present in Harrisburg or Flint as a necessary
advertising medium, or as a necessary advertising complement to other
media. Radio stations negotiate prices individually with advertisers;
consequently, radio stations can charge different advertisers different
prices. Radio stations generally can identify advertisers with strong
preferences to advertise on radio in their MSAs. Because of this
ability to price discriminate among customers, radio stations may
charge higher prices to advertisers that view radio in their MSA as
particularly effective for their needs, while maintaining lower prices
for other advertisers.
2. Harm to Competition
The Complaint alleges that Cumulus' proposed acquisition of Citadel
would lessen competition substantially in the sale of radio advertising
time in the Flint and Harrisburg MSAs. In particular, the merger would
further concentrate markets that are already highly concentrated. The
Complaint alleges that Cumulus' market share in each of the Flint and
Harrisburg MSAs would exceed 40 percent after the merger. Using a
measure of market concentration called the Herfindahl-Hirschman Index
(``HHI''), which is explained in Appendix A to the Complaint, the
merger would result in concentration in each of these markets in excess
of 3,900 points, well above the 2,500 threshold at which the United
States normally considers a market to be highly concentrated.
Furthermore, the Complaint alleges that the merger would eliminate
substantial head-to-head competition between Cumulus and Citadel for
advertisers seeking to reach specific audiences present in the Flint
and Harrisburg MSAs. Advertisers select radio stations to reach a large
percentage of their target audience based upon a number of factors,
including, inter alia, the size of the station's audience, the
characteristics of its audience, and the geographic reach of a
station's signal. Many advertisers seek to reach a large percentage of
their target listeners by selecting those stations whose audience best
correlates to their target listeners. Today, Cumulus and Citadel each
have stations in the Flint and Harrisburg MSAs that substantially
compete head-to-head to reach the same target audiences. For many local
and national advertisers buying time in each of those markets, the
Cumulus and Citadel stations are close substitutes for each other based
on their specific audience characteristics. During individual price
negotiations between advertisers and radio stations, advertisers often
provide the stations with information about their advertising needs,
including their target audience and the desired frequency and timing of
ads. Radio stations have the ability to charge advertisers differing
rates based in part on the number and attractiveness of competitive
radio stations that can meet a particular advertiser's specific target
needs. During these negotiations, advertisers that desire to reach a
certain target audience can gain more competitive rates by ``playing
off'' Cumulus stations against Citadel stations in the Flint and
Harrisburg MSAs. The proposed acquisition would end this competition.
Format changes are unlikely to deter the anticompetitive
consequences of this transaction. Successful radio stations are
unlikely to undertake a format change solely in response to small but
significant increases in price being charged to advertisers by a multi-
station firm such as Cumulus because they likely would lose a
substantial portion of their existing audiences. Even if less
successful stations did change format, they still would be unlikely to
attract in a timely manner enough listeners to provide suitable
alternatives to the Cumulus stations in their markets.
For all of these reasons, the Complaint alleges that Cumulus'
proposed acquisition of Citadel would lessen competition substantially
in the sale of radio advertising time to advertisers targeting
listeners present in the Flint and Harrisburg MSAs, eliminate head-to-
head competition between Cumulus and Citadel in the Flint and
Harrisburg MSAs, and result in increased prices and reduced quality of
service for radio advertisers in those MSAs, all in violation of
Section 7 of the Clayton Act.
III. Explanation of the Proposed Final Judgment
The proposed Final Judgment will preserve competition in the sale
of radio advertising time to advertisers targeting listeners in the
Flint and Harrisburg MSAs by requiring substantial radio station
divestitures.
A. Radio Divestitures
The proposed Final Judgment requires Cumulus to divest three
broadcast radio stations--one in the Flint MSA and two in the
Harrisburg MSA. The divestitures will reduce Cumulus' share in
advertising revenues in the Flint and Harrisburg MSAs to less than 40
percent. The divestitures will preserve choices for advertisers and
will ensure that radio advertising prices do not increase and services
do not decline as a result of the transaction.
Cumulus must divest: WRSR, WCAT, and the Federal Communications
Commission (``FCC'') license and broadcast signal associated with WWKL
along with the intellectual property and broadcast radio programming
associated with WTPA. The divestitures must be to a purchaser or
purchasers acceptable to the United States in its sole discretion.
Except in the case of WWKL, and unless the United States otherwise
consents in writing, the divestitures will include all the assets of
the stations being divested, and will be accomplished in a way that
[[Page 56802]]
will satisfy the United States, in its sole discretion, that such
assets can and will be used as viable, ongoing commercial radio
businesses. With respect to WWKL and WTPA, the divestiture will include
assets sufficient to satisfy the United States, in its sole discretion,
that such assets can and will be used to operate WWKL as a viable,
ongoing, commercial radio business. The signal strength of that station
will be 1,500 watts and the format of the station attracts listeners in
the key demographic categories that advertisers desire. Thus, the WWKL/
WTPA divestiture will help maintain an economically viable competitor
in the Harrisburg MSA.
The relief in the proposed Final Judgment is intended to remedy the
likely anticompetitive effects of Cumulus' proposed acquisition of
Citadel in the Flint and Harrisburg MSAs. Nothing in the proposed Final
Judgment is intended to limit the United States' ability to investigate
other past or future activities of Cumulus or Citadel in the Flint and
Harrisburg MSAs, or any other MSAs.
1. The Management Trustee
The Preservation of Assets Stipulation and Order, filed at the same
time as the Complaint, provides for the appointment of a management
trustee to oversee the operations of the Radio Assets prior to the
Court's approval of the proposed Final Judgment. The United States
contemplates that the Court also will appoint the management trustee as
the divestiture trustee pursuant to Section IV of the proposed Final
Judgment upon the Court's approval of the proposed Final Judgment.
Unless properly maintained, the value of the Radio Assets may
diminish. As a result, the appointment of a management trustee is
appropriate to ensure that the Radio Assets maintain their competitive
viability and economic value prior to the Court's approval of the
proposed Final Judgment. The management trustee will have the power to
operate the Radio Assets in the ordinary course of business, so that
they will remain independent and uninfluenced by defendants, and so
that the Radio Assets are preserved and the related radio stations are
operated as an ongoing and economically viable competitor to defendants
and to other broadcast radio companies. The management trustee will
preserve the confidentiality of competitively sensitive marketing,
pricing, and sales information; ensure defendants' compliance with the
Stipulation and the proposed Final Judgment; and maximize the value of
the Radio Assets so as to permit expeditious divestiture in a manner
consistent with the proposed Final Judgment.
The Stipulation provides that defendants will pay all costs and
expenses of the management trustee, including the cost of consultants,
accountants, attorneys, and other representatives and assistants hired
by the management trustee as are reasonably necessary to carry out his
or her duties and responsibilities. After the management trustee's
appointment becomes effective, the management trustee will file monthly
reports with the United States setting forth efforts taken to
accomplish the goals of the Stipulation and the proposed Final Judgment
and the extent to which defendants are fulfilling their
responsibilities.
2. The Divestiture Trustee
The proposed Final Judgment provides that the Court will appoint a
divestiture trustee, selected by the United States upon consultation
with the FCC, to effect the divestitures of the Radio Assets and to
serve until the Radio Assets are sold to one or more acquirers. Cumulus
must divest WCAT and WWKL to an FCC trust in order to comply with FCC
local ownership rules. The United States, having consulted with the
FCC, will nominate a divestiture trustee. As part of the divestiture,
defendants must relinquish any direct or indirect financial control and
any direct or indirect role in management of the Radio Assets. Pursuant
to Section IV of the proposed Final Judgment, the divestiture trustee
will have the legal right to control the Radio Assets until they are
sold to a final purchaser, subject to safeguards to prevent defendants
from influencing their operation.
Section IV of the proposed Final Judgment details the requirements
for the establishment of the divestiture trust, the selection and
compensation of the divestiture trustee, and the responsibilities of
the divestiture trustee in connection with the divestiture and
operation of the Radio Assets. The divestiture trustee has the
authority to accomplish divestitures at the earliest possible time and
``at such price and on such terms as are then obtainable upon
reasonable effort by the trustee.''
The proposed Final Judgment provides that defendants will pay all
costs and expenses of the divestiture trustee. After the divestiture
trustee's appointment becomes effective, the divestiture trustee will
file monthly reports with the Court and the United States setting forth
the divestiture trustee's efforts to accomplish the divestitures.
Section IV(H) requires the divestiture trustee to divest the Radio
Assets to an acceptable purchaser or purchasers no later than four
months after the assets are transferred to the divestiture trustee,
unless extended by the United States. At the end of that time, if all
divestitures have not been accomplished, the divestiture trustee and
the United States will make recommendations to the Court, which shall
enter such orders as appropriate in order to carry out the purpose of
the Final Judgment, including extending the trust or term of the
divestiture trustee's appointment.
The proposed Final Judgment also requires the defendants to
maintain the independence of the Radio Assets, and requires those
stations to be kept separate and apart from the defendants' other radio
stations. The proposed Final Judgment also contains provisions intended
to ensure that these stations will remain viable and aggressive
competitors after divestiture.
The divestiture provisions of the proposed Final Judgment will
eliminate the anticompetitive effects of the transaction. The
divestitures of the Radio Assets will preserve competition to sell
radio advertising time to advertisers targeting listeners present in
the Flint and Harrisburg MSAs by maintaining an independent and
economically viable competitor in the Flint and Harrisburg MSAs.
B. Ban on Reacquisition
The defendants may not reacquire any of the assets divested
pursuant to the terms of the proposed Final Judgment during the term of
the consent decree, which is for ten years unless extended by the
Court. Reacquisition of any of those assets would undermine, if not
negate, the benefits of the relief obtained in these markets.
Accordingly, this provision is necessary to protect the integrity of
the relief.
IV. Remedies Available to Potential Private Litigants
Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in federal court to recover three times
the damages the person has suffered, as well as costs and reasonable
attorneys' fees. Entry of the proposed Final Judgment will neither
impair nor assist the bringing of any private antitrust damage action.
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C.
16(a), the proposed Final Judgment has no prima facie effect in
[[Page 56803]]
any subsequent private lawsuit that may be brought against defendants.
V. Procedures Available for Modification of the Proposed Final Judgment
The United States and the defendants have stipulated that the
proposed Final Judgment may be entered by the Court after compliance
with the provisions of the APPA, provided that the United States has
not withdrawn its consent. The APPA conditions entry upon the Court's
determination that the proposed Final Judgment is in the public
interest.
The APPA provides a period of at least sixty (60) days preceding
the effective date of the proposed Final Judgment within which any
person may submit to the United States written comments regarding the
proposed Final Judgment. Any person who wishes to comment should do so
within sixty (60) days of the date of publication of this Competitive
Impact Statement in the Federal Register or the last date of
publication in a newspaper of the summary of this Competitive Impact
Statement, whichever is later. All comments received during this period
will be considered by the United States, which remains free to withdraw
its consent to the proposed Final Judgment at any time prior to the
Court's entry of judgment. The comments and the response of the United
States will be filed with the Court and published in the Federal
Register. Written comments should be submitted to:
John R. Read, Chief, Litigation III Section, Antitrust Division. United
States Department of Justice, U.S. Department of Justice, 450 Fifth
Street, NW., 4th Floor, Washington, DC 20530.
The proposed Final Judgment provides that the Court retains
jurisdiction over this action, and the parties may apply to the Court
for any order necessary or appropriate for the modification,
interpretation, or enforcement of the proposed Final Judgment.
VI. Alternatives to the Proposed Final Judgment
The United States considered as an alternative to the proposed
Final Judgment, a full trial on the merits against the defendants. The
United States could have continued the litigation and sought
preliminary and permanent injunctions against Cumulus' proposed
acquisition of Citadel. The United States is satisfied, however, that
the radio station divestitures described in the proposed Final Judgment
will preserve competition in the sale of radio advertising in the Flint
and Harrisburg MSAs, the markets described in the Complaint. Thus, the
proposed Final Judgment would achieve all or substantially all of the
relief the United States would have obtained through litigation, but
avoids the time, expense, and uncertainty of a full trial on the merits
of the Complaint.
VII. Standard of Review Under the APPA for the Proposed Final Judgment
The APPA requires that proposed consent judgments in antitrust
cases brought by the United States be subject to a sixty (60) day
comment period, after which the court shall determine whether entry of
the proposed Final Judgment ``is in the public interest.'' 15 U.S.C.
16(e)(1). In making that determination, the court, in accordance with
the statute as amended in 2004, is required to consider:
(A) The competitive impact of such judgment, including
termination of alleged violations, provisions for enforcement and
modification, duration of relief sought, anticipated effects of
alternative remedies actually considered, whether its terms are
ambiguous, and any other competitive considerations bearing upon the
adequacy of such judgment that the court deems necessary to a
determination of whether the consent judgment is in the public
interest; and
(B) the impact of entry of such judgment upon competition in the
relevant market or markets, upon the public generally and
individuals alleging specific injury from the violations set forth
in the complaint including consideration of the public benefit, if
any, to be derived from a determination of the issues at trial.
15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory factors,
the court's inquiry is necessarily a limited one, as the government is
entitled to ``broad discretion to settle with the defendant within the
reaches of the public interest.'' United States v. Microsoft Corp., 56
F.3d 1448, 1461 (D.C. Cir. 1995); see generally United States v. SBC
Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007) (assessing public
interest standard under the Tunney Act); United States v. InBev N.V./
S.A., 2009-2 Trade Cas. (CCH) ] 76,736, 2009 U.S. Dist. LEXIS 84787,
No. 08-1965 (JR), at *3 (D.D.C. Aug. 11, 2009) (noting that the court's
review of a consent judgment is limited and only inquires ``into
whether the government's determination that the proposed remedies will
cure the antitrust violations alleged in the complaint was reasonable,
and whether the mechanism to enforce the final judgment are clear and
manageable.'').\2\
---------------------------------------------------------------------------
\2\ The 2004 amendments substituted ``shall'' for ``may'' in
directing relevant factors for court to consider and amended the
list of factors to focus on competitive considerations and to
address potentially ambiguous judgment terms. Compare 15 U.S.C.
16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); see also SBC Commc'ns,
489 F. Supp. 2d at 11 (concluding that the 2004 amendments
``effected minimal changes'' to Tunney Act review).
---------------------------------------------------------------------------
As the United States Court of Appeals for the District of Columbia
Circuit has held, under the APPA a court considers, among other things,
the relationship between the remedy secured and the specific
allegations set forth in the government's complaint, whether the decree
is sufficiently clear, whether enforcement mechanisms are sufficient,
and whether the decree may positively harm third parties. See
Microsoft, 56 F.3d at 1458-62. With respect to the adequacy of the
relief secured by the decree, a court may not ``engage in an
unrestricted evaluation of what relief would best serve the public.''
United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 1988) (citing
United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see
also Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152
F. Supp. 2d 37, 40 (D.D.C. 2001); InBev, 2009 U.S. Dist. LEXIS 84787,
at *3. Courts have held that:
[T]he balancing of competing social and political interests
affected by a proposed antitrust consent decree must be left, in the
first instance, to the discretion of the Attorney General. The
court's role in protecting the public interest is one of insuring
that the government has not breached its duty to the public in
consenting to the decree. The court is required to determine not
whether a particular decree is the one that will best serve society,
but whether the settlement is ``within the reaches of the public
interest.'' More elaborate requirements might undermine the
effectiveness of antitrust enforcement by consent decree.
Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\3\ In
determining whether a proposed settlement is in the public interest, a
district court ``must accord deference to the government's predictions
about the efficacy of its remedies, and may not require that the
remedies perfectly match the alleged violations.'' SBC
[[Page 56804]]
Commc'ns, 489 F. Supp. 2d at 17; see also Microsoft, 56 F.3d at 1461
(noting the need for courts to be ``deferential to the government's
predictions as to the effect of the proposed remedies''); United States
v. Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003)
(noting that the court should grant due respect to the United States'
prediction as to the effect of proposed remedies, its perception of the
market structure, and its views of the nature of the case).
---------------------------------------------------------------------------
\3\ Cf. BNS, 858 F.2d at 464 (holding that the court's
``ultimate authority under the [APPA] is limited to approving or
disapproving the consent decree''); United States v. Gillette Co.,
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the
court is constrained to ``look at the overall picture not
hypercritically, nor with a microscope, but with an artist's
reducing glass''). See generally Microsoft, 56 F.3d at 1461
(discussing whether ``the remedies [obtained in the decree are] so
inconsonant with the allegations charged as to fall outside of the
`reaches of the public interest' '').
---------------------------------------------------------------------------
Courts have greater flexibility in approving proposed consent
decrees than in crafting their own decrees following a finding of
liability in a litigated matter. ``[A] proposed decree must be approved
even if it falls short of the remedy the court would impose on its own,
as long as it falls within the range of acceptability or is `within the
reaches of public interest.' '' United States v. Am. Tel. & Tel. Co.,
552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) (quoting United
States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd
sub nom. Maryland v. United States, 460 U.S. 1001 (1983); see also
United States v. Alcan Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky.
1985) (approving the consent decree even though the court would have
imposed a greater remedy). To meet this standard, the United States
``need only provide a factual basis for concluding that the settlements
are reasonably adequate remedies for the alleged harms.'' SBC Commc'ns,
489 F. Supp. 2d at 17.
Moreover, the court's role under the APPA is limited to reviewing
the remedy in relationship to the violations that the United States has
alleged in its Complaint, and does not authorize the court to
``construct [its] own hypothetical case and then evaluate the decree
against that case.'' Microsoft, 56 F.3d at 1459; see also InBev, 2009
U.S. Dist. LEXIS 84787, at *20 (``the `public interest' is not to be
measured by comparing the violations alleged in the complaint against
those the court believes could have, or even should have, been
alleged''). Because the ``court's authority to review the decree
depends entirely on the government's exercising its prosecutorial
discretion by bringing a case in the first place,'' it follows that
``the court is only authorized to review the decree itself,'' and not
to ``effectively redraft the complaint'' to inquire into other matters
that the United States did not pursue. Microsoft, 56 F.3d at 1459-60.
As this Court recently confirmed in SBC Communications, courts ``cannot
look beyond the complaint in making the public interest determination
unless the complaint is drafted so narrowly as to make a mockery of
judicial power.'' SBC Commc'ns, 489 F. Supp. 2d at 15.
In its 2004 amendments to the APPA, Congress made clear its intent
to preserve the practical benefits of utilizing consent decrees in
antitrust enforcement, adding the unambiguous instruction that
``[n]othing in this section shall be construed to require the court to
conduct an evidentiary hearing or to require the court to permit anyone
to intervene.'' 15 U.S.C. 16(e)(2). The language wrote into the statute
what Congress intended when it enacted the Tunney Act in 1974, as
Senator Tunney explained: ``The court is nowhere compelled to go to
trial or to engage in extended proceedings which might have the effect
of vitiating the benefits of prompt and less costly settlement through
the consent decree process.'' 119 Cong. Rec. 24,598 (1973) (statement
of Senator Tunney). Rather, the procedure for the public interest
determination is left to the discretion of the court, with the
recognition that the court's ``scope of review remains sharply
proscribed by precedent and the nature of Tunney Act proceedings.'' SBC
Commc'ns, 489 F. Supp. 2d at 11.\4\
---------------------------------------------------------------------------
\4\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the
court to make its public interest determination on the basis of the
competitive impact statement and response to comments alone'');
United States v. Mid-Am. Dairymen, Inc., 1977-1 Trade Cas. (CCH) ]
61,508, at 71,980 (W.D. Mo. 1977) (``Absent a showing of corrupt
failure of the government to discharge its duty, the Court, in
making its public interest finding, should * * * carefully consider
the explanations of the government in the competitive impact
statement and its responses to comments in order to determine
whether those explanations are reasonable under the
circumstances.''); S. Rep. No. 93-298, 93d Cong., 1st Sess., at 6
(1973) (``Where the public interest can be meaningfully evaluated
simply on the basis of briefs and oral arguments, that is the
approach that should be utilized.'').
---------------------------------------------------------------------------
VIII. Determinative Documents
There are no determinative materials or documents within the
meaning of the APPA that were considered by the United States in
formulating the proposed Final Judgment.
Dated: September 8, 2011.
Respectfully submitted,
Mark A. Merva (D.C. Bar 451743). Trial Attorney,
Litigation III Section, Antitrust Division, U.S. Department of
Justice, 450 Fifth Street, NW., 4th Floor, Washington, DC 20530,
(202) 616-1398.
United States District Court for the District of Columbia
United States of America, Plaintiff: v.
Cumulus Media Inc., and Citadel Broadcasting Corporation; Defendants.
Case: 1:11-cv-01619.
Assigned To: Sullivan, Emmet G.
Assign. Date: 9/8/2011.
Description: Antitrust.
[Proposed] Final Judgment
Whereas, Plaintiff, United States of America, filed its Complaint
on August XX, 2011, and the United States of America and defendants
Cumulus Media Inc. (``Cumulus'') and Citadel Broadcasting Corporation
(``Citadel'') (collectively ``Defendants''), by their respective
attorneys, have consented to the entry of this Final Judgment without
trial or adjudication of any issue of fact or law, and without this
Final Judgment constituting any evidence against or admission by any
party regarding any issue of fact or law;
And whereas, Defendants agree to be bound by the provisions of this
Final Judgment pending its approval by the Court;
And whereas, the essence of this Final Judgment is the prompt and
certain divestiture of certain rights or assets by Defendants to assure
that competition is not substantially lessened;
And whereas, the United States requires Defendants to make certain
divestitures for the purpose of remedying the loss of competition
alleged in the Complaint;
And whereas, Defendants have represented to the United States that
the divestitures required below can and will be made and that
Defendants will later raise no claim of hardship or difficulty as
grounds for asking the Court to modify any of the divestiture
provisions contained below;
Now therefore, before any testimony is taken, without trial or
adjudication of any issue of fact or law, and upon consent of the
parties, it is ordered, adjudged and decreed:
I. Jurisdiction
This Court has jurisdiction over the subject matter of and each of
the parties to this action. The Complaint states claims upon which
relief may be granted against Defendants under Section 7 of the Clayton
Act, as amended (15 U.S.C. 18).
II. Definitions
As used in this Final Judgment:
(A) ``Acquirer'' or ``Acquirers'' means the person, persons, entity
or entities to whom Defendants divest all or some of the Radio Assets.
(B) ``Citadel'' means Defendant Citadel Broadcasting Corporation, a
Delaware corporation with its headquarters in Las Vegas, Nevada, its
successors and assigns, and its subsidiaries, divisions, groups,
[[Page 56805]]
affiliates, partnerships and joint ventures, and their directors,
officers, managers, agents, and employees.
(C) ``Cumulus'' means Defendant Cumulus Media Inc., a Delaware
corporation with its headquarters in Atlanta, Georgia, its successors
and assigns, and its subsidiaries, divisions, groups, affiliates,
partnerships and joint ventures, and their directors, officers,
managers, agents, and employees.
(D) ``Defendants'' mean Cumulus and Citadel.
(E) ``Divestiture Cities'' means the Flint, Michigan and
Harrisburg-Lebanon-Carlisle, Pennsylvania Metropolitan Survey Areas
defined as ``Arbitron Markets'' in the BIA Investing in Radio Market
Report 2011.
(F) ``WRSR'' means the broadcast radio station WRSR (FM) licensed
to Owosso, Michigan owned by defendant Cumulus.
(G) ``WCAT'' means the broadcast radio station WCAT (FM) licensed
to Carlisle, Pennsylvania owned by defendant Citadel.
(H) ``WWKL'' means the broadcast radio station WWKL (FM) licensed
to Palmyra, Pennsylvania owned by defendant Cumulus.
(I) ``WTPA'' means the broadcast radio station WTPA (FM) licensed
to Mechanicsburg, Pennsylvania owned by defendant Cumulus.
(J) ``Radio Assets'' means
(1) All right, title, and interest of Cumulus and Citadel in and to
the assets, tangible or intangible, used in the operations of WRSR and
WCAT, including, but not limited to: (i) All real property (owned or
leased) used in the operation of each station; (ii) all broadcast
equipment, office equipment, office furniture, fixtures, materials,
supplies, and other tangible property used in the operation of each
station; (iii) all licenses, permits, and other authorizations issued
by the Federal Communications Commission (``FCC'') and other government
agencies related to each station, along with all applications pending
before the FCC and other governmental agencies for any new
authorizations or the renewal or modification of existing
authorizations for each station; (iv) all contracts, agreements, leases
and commitments of Cumulus or Citadel (including those relating to
programming) relating to the operation of each station; (v) all
trademarks, service marks, trade names, copyrights, patents, slogans,
programming materials, and promotional materials relating to each
station; and (vi) all logs and other records maintained by Cumulus or
Citadel relating to the business of each station; save and except for
any such specifically enumerated assets that are principally devoted to
the operations of stations other than WRSR and WCAT or to the operation
of their parent companies, and not necessary to the operation of WRSR
and WCAT as viable, ongoing commercial radio broadcasting businesses;
(2) All right, title, and interest of Cumulus and Citadel in and to
the assets, tangible or intangible, used in the operation of WWKL
(other than WWKL's intellectual property), including (i) All real
property (owned or leased) used in the operation of WWKL; (ii) all
broadcast equipment, office equipment, office furniture, fixtures,
materials, supplies, and other tangible property used in the operation
of WWKL; (iii) all licenses, permits, and other authorizations issued
by the FCC and other government agencies related to WWKL, along with
all applications pending before the FCC and other governmental agencies
for any new authorizations or the renewal or modification of existing
authorizations for WWKL; (iv) all contracts, agreements, leases and
commitments of Cumulus or Citadel relating to the operation of WWKL but
excluding (a) All contracts, agreements and commitments relating to
programming, and (b) all trademarks, service marks, trade names,
copyrights, patents, slogans, programming materials, and promotional
materials used in the operation of WWKL; (v) all logs and other records
maintained by Cumulus or Citadel relating to the business of WWKL; save
and except for any such specifically enumerated assets that are
principally devoted to the operations of stations other than WWKL or to
the operation of its parent company, and not necessary to the operation
of WWKL as a viable, ongoing commercial radio broadcasting business;
(3) All right, title and interest of Cumulus in and to the
intellectual property used in the operation of WTPA (which will be made
available to the trustee in the operation and subsequent sale of WWKL),
including (i) All programming contracts, agreements, and commitments;
(ii) all trademarks, service marks, trade names, copyrights, patents,
slogans, programming materials, and promotional materials used in the
operation of WTPA; and (iii) records maintained by Cumulus or Citadel
that identify parties who have purchased advertising time on WTPA in
the prior twelve (12) months.
III. Applicability
(A) This Final Judgment applies to both Defendants, as defined
above, and all other persons in active concert or participation with
the Defendants who receive actual notice of this Final Judgment by
personal service or otherwise.
(B) If, prior to complying with Section IV of this Final Judgment,
Defendants sell, license, or otherwise dispose of all or substantially
all of their assets or of lesser business units that include the Radio
Assets, Defendants shall require the Acquirer or Acquirers to be bound
by the provisions of this Final Judgment.
IV. Divestitures
(A) The United States, having consulted with the FCC, will nominate
a trustee to effect the divestiture of the Radio Assets and to serve
until the Radio Assets are sold to one or more Acquirers. Defendants
shall not object to the trustee's immediate appointment by this Court.
In the event of the trustee's resignation, incapacity to act or death,
this Court shall appoint another trustee, selected by the United
States, after consultation with the FCC, to effect the divestiture of
the Radio Assets. In this event, the United States will identify to
Defendants the individual or entity it proposes to select as trustee.
The United States will move the Court to approve and appoint a
substitute trustee.
(B) Unless the United States otherwise consents in writing, the
divestitures by the trustee shall include all of the Radio Assets, and
shall be accomplished in such a way as to satisfy the United States, in
its sole discretion, that the divestiture will achieve the purposes of
this Final Judgment and that the Radio Assets can and will be used by
the Acquirer or Acquirers as part of one or more viable, ongoing
commercial radio broadcasting businesses. Divestiture of the Radio
Assets may be made to one or more Acquirers, provided that in each
instance it is demonstrated to the sole satisfaction of the United
States that the Radio Assets will remain viable and that the
divestiture of such assets will remedy the competitive harm alleged in
the Complaint. The divestitures pursuant to this Final Judgment:
(i) Shall be made to an Acquirer or Acquirers that, in the United
States' sole judgment, has or have the intent and capability (including
the necessary managerial, operational, technical, and financial
capability) of competing effectively in the commercial radio
broadcasting business in the Divestiture Cities; and
(ii) Shall be accomplished so as to satisfy the United States, in
its sole discretion, that none of the terms of any agreement between an
Acquirer or Acquirers and Defendants gives Defendants the ability
unreasonably to
[[Page 56806]]
raise the Acquirer's costs, to lower the Acquirer's efficiency, or
otherwise to interfere in the ability of the Acquirer to compete
effectively.
(C) Only the trustee shall have the right to sell the Radio Assets.
The trustee shall have the power and authority to accomplish the
divestitures to an Acquirer or Acquirers acceptable to the United
States at such price and on such terms as are then obtainable upon
reasonable effort by the trustee, subject to the provisions of Sections
IV and V of this proposed Final Judgment, and shall have such other
powers as this Court deems appropriate. Subject to Section IV (E) of
this proposed Final Judgment, the trustee may hire at the cost and
expense of Defendants any investment bankers, attorneys, or other
agents, who shall be solely accountable to the trustee, reasonably
necessary in the trustee's judgment to assist in the divestitures.
(D) Defendants shall not object to a sale by the trustee on any
ground other than the trustee's malfeasance. Any such objections by
Defendants must be conveyed in writing to the United States and the
trustee within ten (10) calendar days after the trustee has provided
the notice required under Section V.
(E) The trustee shall serve at the cost and expense of Defendants,
on such terms and conditions as the United States approves, and shall
account for all monies derived from the sale of the assets sold by the
trustee and all costs and expenses so incurred. After approval by the
Court of the trustee's accounting, including fees for its services and
those of any professionals and agents retained by the trustee, all
remaining money shall be paid to Defendants and the trust shall then be
terminated. The compensation of the trustee and any professionals and
agents retained by the trustee shall be reasonable in light of the
value of the Radio Assets and based on a fee arrangement providing the
trustee with an incentive based on the price and terms of the
divestiture and the speed with which it is accomplished, but timeliness
is paramount.
(F) Defendants shall use their best efforts to assist the trustee
in accomplishing the required divestiture. The trustee and any
consultants, accountants, attorneys, and other persons retained by the
trustee shall have full and complete access to the personnel, books,
records, and facilities of the Radio Assets, and Defendants shall
develop financial and other information relevant to the Radio Assets as
the trustee may reasonably request, subject to reasonable protection
for trade secrets or other confidential research, development, or
commercial information. Defendants shall take no action to interfere
with or to impede the trustee's accomplishment of the divestiture.
(G) After its appointment, the trustee shall file monthly reports
with the United States and the Court setting forth the trustee's
efforts to accomplish the divestiture ordered under this Final
Judgment. To the extent such reports contain information that the
trustee deems confidential, such reports shall not be filed in the
public docket of the Court. Such reports shall include the name,
address, and telephone number of each person who, during the preceding
month, made an offer to acquire, expressed an interest in acquiring,
entered into negotiations to acquire, or was contacted or made an
inquiry about acquiring, any interest in the Radio Assets, and shall
describe in detail each contact with any such person. The trustee shall
maintain full records of all efforts made to divest the Radio Assets.
(H) If the trustee has not accomplished the divestiture ordered
under this Final Judgment within four (4) months after its appointment,
the trustee shall promptly file with the Court a report setting forth
(1) The trustee's efforts to accomplish the required divestiture, (2)
the reasons, in the trustee's judgment, why the required divestiture
has not been accomplished, and (3) the trustee's recommendations. The
United States, in its sole discretion, may agree to one or more
extensions of this time period not to exceed three (3) months. To the
extent the report contains information that the trustee deems
confidential, the report shall not be filed in the public docket of the
Court. The trustee shall at the same time furnish such report to the
United States, which shall have the right to make additional
recommendations consistent with the purpose of the trust. The Court
thereafter shall enter such orders as it shall deem appropriate to
carry out the purpose of the Final Judgment, which may, if necessary,
include extending the trust and the term of the trustee's appointment
by a period requested by the United States.
V. Notice of Proposed Divestiture
(A) Within two (2) business days following execution of a
definitive divestiture agreement, the trustee shall notify the United
States of any proposed divestiture required by Section IV of this Final
Judgment. The notice shall set forth the details of the proposed
divestiture and list the name, address, and telephone number of each
person not previously identified who offered or expressed an interest
in or desire to acquire any ownership interest in the Radio Assets,
together with full details of the same.
(B) Within fifteen (15) calendar days of receipt by the United
States of such notice, the United States may request from Defendants,
the proposed Acquirer(s), any other third party, or the trustee, if
applicable, additional information concerning the proposed divestiture,
the proposed Acquirer(s), and any other potential Acquirer. Defendants
and the trustee shall furnish to the United States any additional
information requested within fifteen (15) calendar days of the receipt
of the request, unless the parties shall otherwise agree.
(C) Within thirty (30) calendar days after receipt of the notice or
within twenty (20) calendar days after the United States has been
provided the additional information requested from Defendants, the
proposed Acquirer(s), any third party, and the trustee, whichever is
later, the United States shall provide written notice to Defendants and
the trustee, if there is one, stating whether or not it objects to the
proposed divestiture. If the United States provides written notice that
it does not object, the divestiture may be consummated, subject only to
Defendants' limited right to object to the sale under Section IV(D) of
this Final Judgment. Absent written notice that the United States does
not object to the proposed Acquirer(s) or upon objection by the United
States, a divestiture proposed under Section IV shall not be
consummated. Upon objection by Defendants under Section IV(D), a
divestiture proposed under Section IV shall not be consummated unless
approved by the Court.
VI. Financing
Defendants shall not finance all or any part of any purchase made
pursuant to Section IV of this Final Judgment.
VII. Preservation of Assets
Until the divestitures required by this Final Judgment have been
accomplished, Defendants shall take all steps necessary to comply with
the Preservation of Assets Stipulation and Order entered by this Court
and cease use of the Radio Assets during the period that the trustee
manages the Radio Assets. Defendants shall take no action that would
jeopardize the divestitures ordered by this Court.
VIII. Affidavits
(A) Within twenty (20) calendar days of the filing of the Complaint
in this matter, and every thirty (30) calendar days thereafter until
the divestitures
[[Page 56807]]
have been completed under Section IV, Defendants shall deliver to the
United States an affidavit as to the fact and manner of their
compliance with Section IV of this Final Judgment. Each such affidavit
shall include the name, address, and telephone number of each person
who, during the preceding thirty (30) calendar days, made an offer to
acquire, expressed an interest in acquiring, entered into negotiations
to acquire, or was contacted or made an inquiry about acquiring, any
interest in the Radio Assets, and shall describe in detail each contact
with any such person during that period. Each such affidavit shall also
include a description of the efforts Defendants have taken to solicit
buyers for the Radio Assets and to provide required information to
prospective Acquirers, including the limitations, if any, on such
information. Provided that the information set forth in the affidavit
is true and complete, any objection by the United States to information
provided by Defendants, including any limitation on information, shall
be made within fourteen (14) calendar days of receipt of such
affidavit.
(B) Within twenty (20) calendar days of the filing of the Complaint
in this matter, Defendants shall deliver to the United States an
affidavit that describes in reasonable detail all actions Defendants
have taken and all steps Defendants have implemented on an ongoing
basis to comply with Section VII of this Final Judgment. Defendants
shall deliver to the United States an affidavit describing any changes
to the efforts and actions outlined in Defendants' earlier affidavits
filed pursuant to this Section within fifteen (15) calendar days after
the change is implemented.
(C) Defendants shall keep all records of all efforts made to
preserve the Radio Assets until one (1) year after the respective
divestitures of WCAT, WWKL and WRSR have been completed.
IX. Compliance Inspection
(A) For the purposes of determining or securing compliance with
this Final Judgment, or of determining whether the Final Judgment
should be modified or vacated, and subject to any legally recognized
privilege, from time to time authorized representatives of the United
States, including consultants and other persons retained by the United
States, shall, upon written request of an authorized representative of
the Assistant Attorney General in charge of the Antitrust Division, and
on reasonable notice to Defendants, be permitted:
(i) Access during Defendants' office hours to inspect and copy, or
at the option of the United States, to require Defendants to provide
hard copy or electronic copies of, all books, ledgers, accounts,
records, data, and documents in the possession, custody, or control of
Defendants, relating to any matters contained in this Final Judgment;
and
(ii) To interview, either informally or on the record, Defendants'
officers, employees, or agents, who may have their individual counsel
present, regarding such matters. The interviews shall be subject to the
reasonable convenience of the interviewee and without restraint or
interference by Defendants.
(B) Upon the written request of an authorized representative of the
Assistant Attorney General in charge of the Antitrust Division,
Defendants shall submit written reports or responses to written
interrogatories, under oath if requested, relating to any of the
matters contained in this Final Judgment as may be requested.
(C) No information or documents obtained by the means provided in
this Section shall be divulged by the United States to any person other
than an authorized representative of the executive branch of the United
States, except in the course of legal proceedings to which the United
States is a party (including grand jury proceedings), or for the
purpose of securing compliance with this Final Judgment, or as
otherwise required by law.
(D) If at the time information or documents are furnished by
Defendants to the United States, Defendants represent and identify in
writing the material in any such information or documents to which a
claim of protection may be asserted under Rule 26(c)(1)(G) of the
Federal Rules of Civil Procedure, and Defendants mark each pertinent
page of such material, ``Subject to claim of protection under Rule
26(c)(1)(G) of the Federal Rules of Civil Procedure,'' then the United
States shall give Defendants ten (10) calendar days' notice prior to
divulging such material in any legal proceeding (other than a grand
jury proceeding).
X. No Reacquisition
Defendants shall not reacquire any part of the Radio Assets during
the term of this Final Judgment.
XI. Retention of Jurisdiction
This Court retains jurisdiction to enable any party to this Final
Judgment to apply to this Court at any time for further orders and
directions as may be necessary or appropriate to carry out or construe
this Final Judgment, to modify any of its provisions, to enforce
compliance, and to punish violations of its provisions.
XII. Expiration of Final Judgment
Unless this Court grants an extension, this Final Judgment shall
expire ten (10) years from the date of its entry.
XIII. Public Interest Determination
The parties have complied with the requirements of the Antitrust
Procedures and Penalties Act, 15 U.S.C. 16, including making copies
available to the public of this Final Judgment, the Competitive Impact
Statement, and any comments thereon and the United States' responses to
those comments. Based upon the record before the Court, which includes
the Competitive Impact Statement and any comments and responses to
comments filed with the Court, entry of this Final Judgment is in the
public interest.
Court approval subject to procedures of Antitrust Procedures and
Penalties Act, 15 U.S.C. 16.
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United States District Judge.
[FR Doc. 2011-23548 Filed 9-13-11; 8:45 am]
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